Over a decade since the concept was introduced into Irish law, it is time for a major reform of examinership legislation. Recent cases have exposed serious flaws within the current system, undermining its credibility. The impetus for procedures providing a company with court protection from its creditors while it seeks to effect financial restructuring was created by the crisis that engulfed the Goodman group in 1990.

Emergency legislation enabled the successful restructuring of Larry Goodman's business.

Subsequently there were shocking revelations regarding aspects of the meat group's operations yet the examinership process has provided a vital shield for other companies while they reorganised their affairs. Unfortunately, two high-profile examinerships have exposed flaws in the regime. In the case of Miza Pharmaceuticals, the failure of the examinership has left creditors owed €23 million (two banks are owed a combined €10 million) and almost 300 employees are out of work.

Contrast this grim scenario with the position of George Fasenfeld, the company's former owner. He made over €7 million from Miza under the terms of a deal agreed when the former Antigen Pharmaceuticals went into examinership last year. Fasenfeld managed to achieve a deal outside the examinership process, which was approved by the High Court. Miza's offer to rescue Antigen depended on warranties given by Fasenfeld, which depended on him being paid. There is no suggestion that Fasenfeld did anything wrong. And the deal seemed to give the firm a reasonable prospect of future commercial success. Meanwhile, another group of investors said it was willing to take over the company without any warranties.

However, they would not pay as much money to Fasenfeld. When Miza gained control it sold the intellectual property rights held by Antigen. Next Miza said it would take over the manufacturing plant in Roscrea. Proceeds of the licences sale were used in the paying of Fasenfeld. Miza was unable to invest in Roscrea or pay Antigen's creditors. A second examinership followed, but it was practically impossible to secure a buyer as the intellectual property rights were gone. Miza's swift sale of key assets hardly enhanced the prospects of a sound financial future. This raises basic questions about the ability of the High Court to assess a firm's chances of commercial success.

In another recent examinership, the court unintentionally approved the sale of software firm Digital Channel Partners (DCP) to a Swiss company controlled by an undisclosed Irish bankrupt. Predictably, DCP went out of business, its creditors were left with significant debts and its workers were pitched onto the dole queue.

The two calamitous tales are deeply damaging to the examinership regime. There is an urgent need for reform of court procedures to enable much more detailed probing of proposed rescue arrangements. The courts do not have the practical commercial expertise to carry out proper investigations.

As businesses face into tougher times, the examinership process can provide a valuable breathing space to effect restructuring. But measures must be introduced to end the erosion of confidence that is taking place.